GBPUSD Weekly Technical Outlook: Short-Term Chart Shows Upward Momentum
GBPUSD Technical Highlights, Prices and Analysis
- Daily GBPUSD chart shows oversold conditions.
- Four-our chart suggests price may test 1.28279 in the short-term.
- Client sentiment reveals GBPUSD may move higher.
We have recently released our Q3 Trading Forecasts for a wide range of Currencies and Commodities, including GBPUSD with our fundamental and medium-term term technical outlook.
The oversold nature of GBPUSD – using the RSI indicator at the bottom of the chart – suggests that the pair may move higher in the short- to medium-term, all things being equal i.e. Brexit. The pair have produced three higher lows in a row, hinting at a trend reversal, but we will need to see the pair close with a positive (green) candle and a print above Thursday’s high of 1.27544 to have more confidence in the move. Above here the August 24, 2017 swing low at 1.27738 comes into view but the downward move through this level means its relevance is not as strong as it was pre-move lower.
Overall the medium-term view is unchanged – flat to negative - with the pair currently trading below all three moving averages, and constrained by a sharp downward trend, and needing a move through 1.3000 to begin to alter this outlook.
GBPUSD Daily Price Chart (June 2017 – August 6, 2018)
A look at the four-hour GBPUSD chart suggests that client sentiment (below) may prove correct and the pair will nudge higher. The RSI indicator is moving higher and nears mid-market while cable trades in the 20-to 50-day moving average ‘cloud’, currently between 1.27164 and 1.27864. A move above this would leave Tuesday’s high at 1.28279 the immediate target. The upward trend started on Wednesday remains intact and should provide support to the short-term bullish momentum. A break back below 1.2662 would leave 1.25891 the first target.
GBPUSD Four-Hour Chart (July 16 – August 17, 2018)
GBPUSD Client Sentiment
The IG Client Sentiment Indicatorshows us that retail remain net-long of GBPUSD and have remained so since April 20 when the pair traded around 1.40482. A net-long position normally implies a bearish contrarian view but shifts in client holdings over the last day and week suggest the GBPUSD may soon move higher.
--- Written by Nick Cawley, Analyst
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